By Social activist Remy Majangkim
KOTA KINABALU: Under the Trump Administration, the United States implemented significant tariffs on imported goods, impacting numerous countries, including Malaysia, which now faces a 24% duty on certain exports.
To fully grasp the implications of this policy, it is important to first understand what tariffs are and how they function.
What Are Tariffs?
A tariff is a tax imposed on imported goods, serving as a tool for governments to generate revenue and protect domestic industries.
While some economists argue that tariffs can safeguard local businesses, others warn that they may trigger trade imbalances, higher consumer prices, and retaliatory measures from affected nations.
Historically, tariffs have been a contentious instrument in global trade, often leading to economic friction.
Historical Context of U.S. Tariffs
The last period of heavy U.S. tariffs spanned from 1913 to the 1950s, after which trade liberalisation gained momentum.
However, the Trump administration revived aggressive tariff policies, citing concerns over trade deficits and unfair competition.
This shift comes at a time when the U.S. national debt has ballooned to $27 trillion, far surpassing its $19 trillion GDP. President Trump, leveraging his business background, has framed these tariffs as a necessary corrective measure to rebalance the economy and protect American industries.
Impact on Malaysia
Malaysia, a key trading partner, exported $43.43 billion worth of goods to the U.S. in 2024 (United Nations COMTRADE data).
However, economists predict a potential decline in exports by late 2025 as U.S. consumers and manufacturers may pivot toward domestically produced alternatives.
Key affected sectors include electronics, rubber products, and palm oil, which constitute a significant portion of Malaysia’s shipments to the U.S.
Global Repercussions and Rising Tensions
The U.S. tariffs have not gone unanswered.
China, in a bold retaliatory move, has imposed a 34% tariff on all American goods, escalating fears of a full-blown global trade war.
Other nations, including members of the European Union and ASEAN, are closely monitoring the situation, with some considering their own countermeasures.
Malaysia’s Strategic Options
In response, Malaysia faces critical decisions:
Retaliatory Tariffs – Imposing similar duties on U.S. imports could protect local industries but risk further trade disruptions.
Diversifying Trade Partners – Strengthening ties with alternative markets like China, India, and the EU may reduce dependency on the U.S.
Diplomatic Negotiations – Engaging in bilateral talks to seek exemptions or phased reductions in tariffs.
Boosting Domestic Consumption – Encouraging local demand to offset potential export losses.
The Road Ahead
The coming months will be pivotal for global trade dynamics.
ASEAN nations, including Malaysia, must navigate this volatile landscape carefully. If tensions escalate, supply chains could face severe disruptions, affecting everything from consumer electronics to agricultural commodities.
As the world watches, one thing is clear: the era of trade wars is far from over, and the decisions made today will shape economic stability for years to come.
Will diplomacy prevail, or are we heading toward a prolonged period of protectionism? Only time will tell.
